Underreporting of Means-Tested Transfer Programs in the CPS and SIPP

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Note: This paper was published in

Wheaton, Laura. (2007). “Underreporting of Means-Tested Transfer Programs in the CPS and SIPP,” 2007 Proceedings of the American Statistical Association, Social Statistics Section [CD-ROM], Alexandria, VA: American Statistical Association: 3622-3629.

Reprinted with permission.

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Abstract

This paper shows trends in underreporting of SSI, AFDC/TANF, Food Stamps, and Medicaid/SCHIP from 1993 to 2005 in the Current Population Survey (CPS) and discusses the extent of CPS allocation for nonresponse. Comparisons are made to the Survey of Income and Program Participation (SIPP) for 1997 and 2002. Baseline and poverty estimates from the 2004 simulation of the TRIM3 microsimulation model are presented to demonstrate the use of microsimulation in correcting for underreporting of means-tested benefits in the CPS.

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Introduction

Means-tested transfer benefits are typically underreported in household surveys. In other words, the weighted number of people saying they received transfer benefits and the weighted amount of benefits reported fall short of the actual figures according to administrative data. Researchers should take underreporting into account in designing and interpreting analyses. Changes in the degree of underreporting over time could be particularly problematic for longitudinal analyses.

This paper analyzes the underreporting of means-tested transfer benefits within the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC), which asks about income and program participation in the prior calendar year (CY). We examine the degree of underreporting in each of four benefit programs—Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF), the Food Stamp Program (FSP), and Medicaid and the State Children’s Health Insurance Program (SCHIP)—using thirteen years of CPS data, and also show the extent of underreporting in the Survey of Income and Program Participation (SIPP) for 1997 and 2002. We show the impact of the Census Bureau’s allocation and editing procedures on underreporting in the CPS, and discuss how microsimulation can be used to correct for underreporting. We use the example of the TRIM3 microsimulation model, and show the results of selected poverty-related tabulations before and after TRIM3’s corrections.

Explaining the degree to which various factors contribute to underreporting in the CPS and SIPP is beyond the scope of this paper, but we briefly review some of the possible reasons for underreporting so they can be considered relative to the observed changes in underreporting. Possible reasons for underreporting include:

Stigma: Some recipients may be too embarrassed to report their benefits.

Case closures: Persons no longer receiving assistance at the time of the CPS interview (February, March, or April) may fail to report assistance received during the prior calendar year.

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